FTSE 100 preview: Index poised for slow start following Nikkei sell-off

Japan’s economy contracts further 1.6 percent in third quarter

FTSE 100 preview: Index poised for slow start following Nikkei sell-off

iNVEZZ.com, Monday, November 17: The FTSE 100 Index is seen opening lower following a slump in Japanese equities during the Asian trading session earlier today. A GDP report showed that the world’s third-largest economy had contracted in the third quarter. With American stock markets closing without a significant change in the last US session, the news from Asia is likely to dictate investor sentiment in Europe.

Britain’s benchmark equity index closed 0.29 percent, or 18.92 points, higher at 6,654.37 on Friday. According to data from spread bettor IG, the Footsie will open around 21 points lower today.

US, Asia

The main US equity indices closed little changed on Friday, even though the S&P 500 notched up another record. The index edged up half a point to close at 2039.82, after a report revealed that US retail sales had risen 0.3 percent in October, narrowly beating analyst expectations. At the same time, the Dow Jones Industrial Average fell 0.1 percent to 17634.74 points, while the technology-heavy Nasdaq Composite Index advanced 0.18 percent to 4688.54.

Japan’s equity markets came under pressure in today’s trading after the country’s third-quarter GDP report revealed an annualised 1.6-percent decline. Analysts polled by Reuters had forecast a 2.1 percent gain. Japan’s economy had contracted a revised 7.3 percent in the second quarter.

Reuters quoted Yoshito Sakakibara, executive director of investment research at JP Morgan, as observing: “The first estimate of the GDP is usually very off the reality, especially we're lacking the import component from the corporate statistics to see the capex, and today's number in the capex was a big drag. So, we have to wait to see what the second estimate is but first impression of the result today is shockingly weak for the economy.”

Japan’s benchmark Nikkei 225 index closed down 2.96 percent at 16,973.80 points. Meanwhile, in mainland China the Shanghai Composite Index was marginally up at 2,480.38 points as of 06:44 UTC.

Data

Today’s highlights from the economic calendar include September trade balance data for Italy, Spain, Norway and the eurozone as a whole. Russian unemployment figures for October and the German Bundesbank report for November will also be released today.

There are no FTSE 100 company scheduled to release corporate earnings reports today.

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